Download Session B - Apparel Segment - Best Practices

Supply Chain
Best Practices Consortium
Apparel Best Practices
Executive Seminar
Track 4, Session B
September, 2006
1
Scope
This session explores the trends of the apparel supply chain,
including similarities and differences between wholesale and retail
distribution.

Supply Chain Costs: Facilities, transportation and
operations.

Distribution Best Practices: Receiving, VAS and order
fulfillment.

Opportunities For Improvements
Copyright © 2006 Supply Chain Consortium. All rights reserved.
2
How Am I Doing on Costs?
How do our supply chain costs compare with other companies?
Supply Chain Cost as a % of Revenue
Industry Segment
Performance
Apparel Industry
3.9%
Apparel - Wholesale
3.9%
Apparel - Retail
3.9%
Copyright © 2006 Supply Chain Consortium. All rights reserved.
3
How Am I Doing on Costs?
What impact does transportation have on our overall supply chain
cost?
Transportation Cost as a % of Revenue
Industry Segment
Performance
Apparel Industry
1.6%
Apparel - Wholesale
1.3%
Apparel - Retail
1.7%
Copyright © 2006 Supply Chain Consortium. All rights reserved.
4
How Am I Doing on Costs?
How do our distribution center (DC) operations costs compare?
DC Operations Cost as a % of Revenue
Industry Segment
Performance
Apparel Industry
1.9%
Apparel - Wholesale
2.7%
Apparel - Retail
1.6%
Copyright © 2006 Supply Chain Consortium. All rights reserved.
5
Cost Drivers in the DC
Is the receiving process contributing to wholesaler’s higher DC
operations cost?
Advanced Shipment Notification Received
Industry Segment
Performance
Apparel Industry
98.4%
Apparel - Wholesale
99.0%
Apparel - Retail
98.0%
Copyright © 2006 Supply Chain Consortium. All rights reserved.
6
Cost Drivers in the DC
What about handling costs inside the DC?
Percentage of Inbound Shipments that are Crossdocked
Industry Segment
Performance
Apparel Industry
33.9%
Apparel - Wholesale
5.0%
Apparel - Retail
53.2%
Copyright © 2006 Supply Chain Consortium. All rights reserved.
7
How Am I Doing on Inbound Shipments?
% of Receipts
Wholesalers are clearly handling product inside the DC more than
retailers.
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Apparel
Wholesale
Crossdock
Flow Through
Copyright © 2006 Supply Chain Consortium. All rights reserved.
Retail
Pick/Pack
8
How Am I Doing Inside the DC?
Wholesalers are providing a high level of value-added services in
their DCs.
Apparel Industry
Apparel - Wholesale
15.0%
16.0%
50.9%
32.0%
21.1%
19.8%
13.3%
31.9%
Ticketing
Fold/Hang/Bag
Ticketing
Fold/Hang/Bag
Price Ticket
No Value Added
Price Ticket
No Value Added
Apparel - Retail
5.3%
11.7%
8.2%
74.8%
Ticketing
Fold/Hang/Bag
Price Ticket
No Value Added
Copyright © 2006 Supply Chain Consortium. All rights reserved.
9
How Am I Doing on Outbound Shipments?
How do my DC operations’ outbound shipments compare to other
companies?
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Apparel
Pack-Load
Wholesale
Retail
Pick-Load
Stage-Load
Copyright © 2006 Supply Chain Consortium. All rights reserved.
10
Important Takeaways
While our overall supply chain costs are similar between wholesale
and retail distribution, we see that:

Transportation – Wholesalers have a slight edge in cost as a
percentage of revenue.

DC Operations – Retailers realize a significant reduction in handling.

Value-Added Services – Majority of this work content is performed in
the wholesale DCs.

Crossdocking – Preparation upstream allows retailers to flow more
product through the DC.

Opportunity – What can wholesalers do to reduce handling inside
the DC?
Copyright © 2006 Supply Chain Consortium. All rights reserved.
11
Questions?
12